Notes. Introduction Introduction Introduction Scope of this ISA Scope of This Section Scope of this ISASAS

Transcription

1 Comparison of ISA 720 (Revised), The Auditor s Responsibilities Relating to Other Information and Extant AU-C section 720, Other Information in Documents Containing Audited Financial Statements to the Proposed Revised AU-C section 720 The Auditor s Responsibilities Relating to Other Information in Documents The Auditor s Responsibilities Relating to Other Other Information Containing Audited Financial Information Included in Annual Reports Statements Introduction Introduction Introduction Scope of this ISA Scope of This Section Scope of this ISASAS 1. This International Standard on Auditing.01 This section addresses the auditor's (ISA) deals with the auditor s responsibility with respect to other responsibilities relating to other information, information in documents containing whether financial or non-financial audited financial statements and the information (other than financial statements and the auditor s report thereon), included in auditor's report thereon. In the absence of any separate requirement in the particular 1. This International Standard on Auditing (ISA)Statement on Auditing Standards (SAS) deals withaddresses the auditor s responsibilities relating to other information, whether financial or non-financial information (other than financial statements and the auditor s report thereon), included in an entity s annual 1 Copyright April 2015 by the International Federation of Accountants (IFAC). All rights reserved. Reproduced with the permission of IFAC. 2 This proposed Statement on Auditing Standards uses certain International Federation of Accountants (IFAC) copyright material, used with the permission of IFAC. Prepared by: Mike Glynn (June 2017) Page 1 of 66

2 circumstances of the engagement, the report. An entity s annual report may be a single auditor's opinion on the financial document or a combination of documents that serve the statements does not cover other same purpose. (Ref: par. A1) information, and the auditor has no responsibility for determining whether such information is properly stated. This section establishes the requirement for the auditor to read the other information of which the auditor is aware because the credibility of the audited financial statements may be undermined by material inconsistencies between the audited financial statements and other information. (Ref: par..a1.a2) an entity s annual report. An entity s annual report may be a single document or a combination of documents that serve the same purpose..02 In this section, documents containing audited financial statements refers to annual reports (or similar documents) that are issued to owners (or similar stakeholders) and annual reports of governments and organizations for charitable or philanthropic purposes that are available to the public that contain audited financial statements and the auditor's report thereon. This section also may be applied, adapted as necessary in the circumstances, to other documents to which the auditor, at management's request, devotes attention. (Ref: par. A3- A5) 2. This SAS also may be applied, adapted as necessary in the circumstances, to other documents to which the auditor, at management s request, devotes attention. (Ref: par. A2-A4) ASB directed that the language be consistent with extant (May 2017). Page 2 of 66

3 23. This ISA proposed SAS is written in the context of an audit of financial statements by an independent auditor. Accordingly, the objectives of the auditor in this ISA proposed SAS are to be understood in the context of the overall objectives of the auditor as stated in paragraph of ISA 200AU-C section 200, Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance With Generally Accepted Auditing Standards. fn 1 The requirements in the ISAs standards are designed to enable the auditor to achieve the objectives specified in the ISAsstandards, and thereby the overall objectives of the auditor. The auditor s opinion on the financial statements does not cover the other information, nor does this ISA proposed SAS require the auditor to obtain audit evidence beyond that required to form an opinion on the financial statements. 2. This ISA is written in the context of an audit of financial statements by an independent auditor. Accordingly, the objectives of the auditor in this ISA are to be understood in the context of the overall objectives of the auditor as stated in paragraph 11 of ISA 200. fn 1 The requirements in the ISAs are designed to enable the auditor to achieve the objectives specified in the ISAs, and thereby the overall objectives of the auditor. The auditor s opinion on the financial statements does not cover the other information, nor does this ISA require the auditor to obtain audit evidence beyond that required to form an opinion on the financial statements. fn 1 ISA 200, Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with International Standards on Auditing. 3. This ISA requires the auditor to read and consider the other information because other information that is materially inconsistent with the financial statements or the auditor s knowledge obtained in the audit may indicate that there is a material misstatement of the financial statements or that a material misstatement of the other information exists, fn 1 ISA 200, Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with International Standards on Auditing. 34. This ISA proposed SAS requires the auditor to read and consider the other information because other information that is materially inconsistent with the financial statements or the auditor s knowledge obtained in the audit may indicate that there is a material misstatement of the financial statements or that a material misstatement of the other information exists, either of which may undermine the credibility of the Page 3 of 66

4 financial statements and the auditor s report thereon. Such material misstatements may also inappropriately influence the economic decisions of the users for whom the auditor s report is prepared. either of which may undermine the credibility of the financial statements and the auditor s report thereon. Such material misstatements may also inappropriately influence the economic decisions of the users for whom the auditor s report is prepared. 4. This ISA may also assist the auditor in complying with relevant ethical requirements fn 2 that require the auditor to avoid being knowingly associated with information that the auditor believes contains a materially false or misleading statement, statements or information furnished recklessly, or omits or obscures information required to be included where such omission or obscurity would be misleading. fn 2 See paragraph of the International Ethics Standards Board for Accountants, Code of Ethics for Professional Accountants (IESBA Code). 4. This ISA may also assist the auditor in complying with relevant ethical requirements fn 2 that require the auditor to avoid being knowingly associated with information that the auditor believes contains a materially false or misleading statement, statements or information furnished recklessly, or omits or obscures information required to be included where such omission or obscurity would be misleading. fn 2 See paragraph of the International Ethics Standards Board for Accountants, Code of Ethics for Professional Accountants (IESBA Code). The paragraph is not included as corresponding language is not included in the AICPA Code. AICPA Professional Ethics Team staff stated that the following Code paragraph is considered to incorporate the essence of the IESBA standard (emphasis added); Integrity and Objectivity Rule.01 In the performance of any professional service, a member shall maintain objectivity and integrity, shall be free of conflicts of interest, and shall not Page 4 of 66

5 5. Other information may include amounts or other items that are intended to be the same as, to summarize, or to provide greater detail, about amounts or other items in the financial statements, and other amounts or other items about which the auditor has obtained knowledge in the audit. Other information may also include other matters. 6. The auditor s responsibilities relating to other information (other than applicable reporting responsibilities) apply regardless of whether the other information is obtained by the auditor prior to, or after, the date of the auditor s report. 7. This ISA does not apply to: 5. Other information may include amounts or other items that are intended to be the same as, to summarize, or to provide greater detail, about amounts or other items in the financial statements and other amounts or other items about which the auditor has obtained knowledge in the audit. Other information may also include other matters. 6. The auditor s responsibilities relating to other information (other than applicable reporting responsibilities) apply regardless of whether the other information is obtained by the auditor prior to, or after, the date of the auditor s report. 7. This ISA does not apply to: knowingly misrepresent facts or subordinate his or her judgment to others. [Prior reference: paragraph.01 of ET section 102] (a) Preliminary announcements of financial information; or (b) Securities offering documents, including prospectuses. 8. The auditor s responsibilities under this ISA do not constitute an assurance engagement on other information or impose (a) Preliminary announcements of financial information; or (b) Securities offering documents, including prospectuses. 87. The auditor s responsibilities under this ISA proposed SAS do not constitute an assurance engagement on other information or impose an Page 5 of 66

6 an obligation on the auditor to obtain obligation on the auditor to obtain assurance about the assurance about the other information. other information. 9. Law or regulation may impose additional 98. Law or regulation may impose additional obligations obligations on the auditor in relation to other on the auditor in relation to other information that are information that are beyond the scope of this beyond the scope of this ISAproposed SAS. ISA. 9. This proposed SAS does not apply to supplemental information addressed by AU-C section 725, Supplementary Information in Relation to the Financial Statements as a Whole or required supplementary information addressed by AU-C section 730, Required Supplementary Information. (Ref: par. A3) Effective Date Effective Date Effective Date 10. This ISA is effective for audits of.03 This section is effective for audits of 10. This ISA proposed SAS is will be effective for financial statements for periods ending on or financial statements for periods beginning audits of financial statements for periods ending on or after December 15, on or after December 15, Early after December 15, 2016June 15, * Early application is permitted. implementation is not permitted. Consistent with the proposed effective date of the proposed auditor reporting suite of standards. Objectives Objective Objectives 11. The objectives of the auditor, having read the other information, are: (a) To consider whether there is a material inconsistency between the other information and the financial statements; (b) To consider whether there is a material.04 The objective of the auditor is to respond appropriately when the auditor becomes aware that documents containing audited financial statements and the auditor's report thereon include other information that could undermine the credibility of those financial statements and the auditor's report. * This proposed effective date is provisional but will not be earlier than June 15, The objectives of the auditor, having read the other information, are as follows: (a.) To consider whether there is a material inconsistency between the other information and the financial statements; (b.) To consider whether there is a material Page 6 of 66

7 inconsistency between the other information and the auditor s knowledge obtained in the audit; inconsistency between the other information and the auditor s knowledge obtained in the audit; (c) To respond appropriately when the auditor identifies that such material inconsistencies appear to exist, or when the auditor otherwise becomes aware that other information appears to be materially misstated; and (d) To report in accordance with this ISA. Definitions Definitions Definitions 12. For purposes of the ISAs, the following terms have the meanings attributed below: (a) Annual report A document, or combination of documents, prepared typically on an annual basis by management or those charged with governance in accordance with law, regulation or custom, the purpose of which is to provide owners (or similar stakeholders) with information on the entity s operations and the entity s financial results and financial position as set out in the financial statements. An annual report contains or accompanies the financial statements and the auditor s.05 For purposes of generally accepted auditing standards (GAAS), the following terms have the meanings attributed as follows: Inconsistency. Other information that conflicts with information contained in the audited financial statements. A material inconsistency may raise doubt about the audit conclusions drawn from audit evidence previously obtained and, possibly, about the basis for the auditor's opinion on the financial statements. Misstatement of fact. Other information that is unrelated to matters appearing in (c.) To respond appropriately when the auditor identifies that such material inconsistencies appear to exist, or when the auditor otherwise becomes aware that other information appears to be materially misstated; and (d.) To report in accordance with this ISAproposed SAS. 12. For purposes of the ISAsauditing standards, the following terms have the meanings attributed below: (a) Annual report. A document, or combination of documents, prepared typically on an annual basis by management or those charged with governance in accordance with law, regulation or custom, the purpose of which is to provide owners (or similar stakeholders) with information on the entity s operations and the entity s financial results and financial position as set out in the financial statements. An annual report contains, or accompanies, or incorporates by reference the financial statements and the auditor s report thereon and usually includes information about the entity s developments, its future outlook and risks and The definition of annual report is primarily from ISA 720 (Revised). Differences of note: 1) The proposed SAS definition states that the annual report contains, accompanies, or incorporates by reference the financial statements and auditor s report thereon. ISA 720 (Revised) does not Page 7 of 66

8 the audited financial statements that is incorrectly stated or presented. A material misstatement of fact may undermine the credibility of the document containing audited financial statements. report thereon and usually includes information about the entity s developments, its future outlook and risks and uncertainties, a statement by the entity s governing body, and reports covering governance matters. (Ref: Para. A1 A5) Other information. Financial and nonfinancial information (other than the financial statements and the auditor's report thereon) that is included in a document containing audited financial statements and the auditor's report thereonan entity s annual report, excluding required supplementary information. 1 1 Required supplementary information is defined in paragraph.04 of section 730, Required Supplementary Information. uncertainties, a statement by the entity s governing body, and reports covering governance matters. Annual reports include annual reports of governments and organizations for charitable or philanthropic purposes that are available to the public. (Ref: Parapar. A1A5 A5A11) include the incorporates by reference wording. Incorporates by reference is consistent with the proposed SAS, Auditor Involvement with Exempt Offerings. 2) The SAS includes the concept of annual reports of governments and charitable organizations from extant AU-C section 720. (b) Misstatement of the other information A misstatement of the other information exists when the other information is incorrectly stated or otherwise misleading (including because it omits or obscures information (b) Misstatement of the other information. A misstatement of the other information exists when the other information is incorrectly stated or otherwise misleading (including because it omits or obscures information necessary for a proper understanding of a matter disclosed in the other Page 8 of 66

9 necessary for a proper understanding of information). (Ref: Parapar. A6A12 A7A14) a matter disclosed in the other information). (Ref: Para. A6 A7) (c) Other information Financial or nonfinancial information (other than financial statements and the auditor s report thereon) included in an entity s annual report. (Ref: Para. A8 A10) (c) Other information. Financial or non-financial information (other than financial statements and the auditor s report thereon) included in an entity s annual report. (Ref: Parapar. A8 A10A15) Requirements Requirements Requirements Obtaining the Other Information Obtaining the Other Information 13. The auditor shall: (Ref: Para. A11 A22) (a) Determine, through discussion with management, which document(s) comprises the annual report, and the entity s planned manner and timing of the issuance of such document(s); (b) Make appropriate arrangements with management to obtain in a timely manner and, if possible, prior to the date of the auditor s report, the final version of the document(s) comprising the annual report; and (c) When some or all of the document(s) determined in (a) will not be available until after the date of the auditor s 13. The auditor shallshould do the following: (Ref: Ppara. A11A16 A22A26) (a.) Determine, through discussion with management, and obtain management s written acknowledgement regarding, which document or document(s) comprises comprose the annual report, and the entity s planned manner and timing of the issuance of such document(s);. (b.) Make appropriate arrangements with management to obtain in a timely manner and, if possible, prior to the date of the auditor s report, the final version of the document or document(s) comprising composing the annual report; and. (c.) When some or all of the document(s) determined Page 9 of 66

10 report, request management to provide a in (a) will not be available until after the date of the written representation that the final auditor s report on the financial statements, request version of the document(s) will be management to provide a written representation that provided to the auditor when available, the final version of the document(s) will be provided and prior to its issuance by the entity, to the auditor when available, and prior to its the such that the auditor can complete the document s issuance by the entity, such that the procedures required by this ISA. (Ref: auditor can complete the procedures required by this Para. A22) ISAproposed SAS. (Ref: Parapar. A22A25-A26) 14. If the auditor becomes aware that the entity did not provide the auditor with the final version of documents determined in accordance with paragraph 13a to be part of the annual report prior to the issuance of those documents to third parties, the auditor should take appropriate action. (Ref: par. A27) Reading and Considering the Other Reading Other Information Reading and Considering the Other Information Information 14. The auditor shall read the other information and, in doing so shall: (Ref: Para. A23 A24) (a) Consider whether there is a material inconsistency between the other information and the financial statements. As the basis for this consideration, the auditor shall, to evaluate their consistency, compare selected amounts or other items in the other information (that are intended to be the same as, to summarize, or to provide greater detail.06 The auditor should read the other information of which the auditor is aware in order to identify material inconsistencies, if any, with the audited financial statements The auditor shall should read the other information and, in doing so shall do the following: (Ref: Parapar. A23A28 A24A29) (a.) Consider whether there is a material inconsistency between the other information and the financial statements. As the basis for this consideration, the auditor shallshould, to evaluate their consistency, compare selected amounts or other items in the other information (that are intended to be the same as, to summarize, or to provide greater detail about, the amounts or other items in the financial statements) with such amounts or other items in the financial Page 10 of 66

11 statements; and (Ref: Parapar. A25A30 A29A34) about, the amounts or other items in the financial statements) with such amounts or other items in the financial statements; and (Ref: Para. A25 A29) (b) Consider whether there is a material inconsistency between the other information and the auditor s knowledge obtained in the audit, in the context of audit evidence obtained and conclusions reached in the audit. (Ref: Para. A30 A36).07 The auditor should make appropriate arrangements with management or those charged with governance to obtain the other information prior to the report release date. 2 If it is not possible to obtain all of the other information prior to the report release date, the auditor should read such other information as soon as practicable. (Ref: par..a6) (b.) Consider whether there is a material inconsistency between the other information and the auditor s knowledge obtained in the audit, in the context of audit evidence obtained and conclusions reached in the audit. (Ref: Parapar. A30A35 A36A42) 2 See paragraph.06 of section 230, Audit Documentation, for the definition of report release date..08 The auditor should communicate with those charged with governance the auditor's responsibility with respect to the other information, any procedures Page 11 of 66

12 performed relating to the other information, and the results. 15. While reading the other information in accordance with paragraph 14, the auditor shall remain alert for indications that the other information not related to the financial statements or the auditor s knowledge obtained in the audit appears to be materially misstated. (Ref: Para. A37 A38) Responding When a Material Inconsistency Appears to Exist or Other Information Appears to be Materially Misstated 16. If the auditor identifies that a material inconsistency appears to exist (or becomes aware that the other information appears to be materially misstated), the auditor shall discuss the matter with management and, if necessary, perform other procedures to conclude whether: (Ref: Para. A39 A43) Material Inconsistencies.09 If, on reading the other information, the auditor identifies a material inconsistency, the auditor should determine whether the audited financial statements or the other information needs to be revised While reading the other information in accordance with paragraph 1415, the auditor shall should remain alert for indications that the other information not related to the financial statements or the auditor s knowledge obtained in the audit appears to be materially misstated. (Ref: Parapar. A37A43 A38A44) Responding When a Material Inconsistency Appears to Exist or Other Information Appears to be Materially Misstated If the auditor identifies that a material inconsistency appears to exist (or becomes aware that the other information appears to be materially misstated), the auditor shall should discuss the matter with management and, if necessary, perform other procedures to conclude whetherthe following: (Ref: Parapar. A39A45 A43A49) (a) A material misstatement of the other information exists; (b) A material misstatement of the financial statements exists; or (c) The auditor s understanding of the entity and its environment needs to be (a.) Whether Aa material misstatement of the other information exists; (b.) Whether Aa material misstatement of the financial statements exists; or (c.) Whether Tthe auditor s understanding of the entity and its environment needs to be updated. Page 12 of 66

13 updated. Responding When the Auditor Concludes That a Material Misstatement of the Other Information Exists 17. If the auditor concludes that a material misstatement of the other information exists, the auditor shall request management to correct the other information. If management: (a) Agrees to make the correction, the auditor shall determine that the correction has been made; or (b) Refuses to make the correction, the auditor shall communicate the matter with those charged with governance and request that the correction be made. Material Inconsistencies Identified Prior to the Date of the Auditor s Report That Require Revision of the Audited Financial Statements.10 When the auditor identifies a material inconsistency prior to the date of the auditor's report that requires revision of the audited financial statements and management refuses to make the revision, the auditor should modify the auditor's opinion in accordance with section 705, Responding When the Auditor Concludes That a Material Misstatement of the Other Information Exists If the auditor concludes that a material misstatement of the other information exists, the auditor shall should request management to correct the other information. If management: (a.) If management Aagrees to make the correction, the auditor shall should determine that the correction has been made; or (b.) If management Rrefuses to make the correction, the auditor shall should communicate the matter with those charged with governance and request that the correction be made. Page 13 of 66

14 Modifications to the Opinion in the Independent Auditor's Report. Material Inconsistencies Identified After the Date of the Auditor s Report But Prior to the Report Release Date That Require Revision of the Audited Financial Statements.11 When the auditor identifies a material inconsistency after the date of the auditor's report but prior to the report release date that requires revision of the audited financial statements, the auditor should apply the relevant requirements in section 560, Subsequent Events and Subsequently Discovered Facts If the auditor concludes that a material misstatement exists in other information obtained prior to the date of the auditor s report, and the other information is not corrected after communicating with those charged with governance, the auditor shall take appropriate action, including: (Ref: Para. A44) (a) Considering the implications for the 3 Paragraphs of section 560, Subsequent Events and Subsequently Discovered Facts..12 When the auditor identifies a material inconsistency prior to the report release date that requires revision of the other information and management refuses to make the revision, the auditor should communicate this matter to those charged with governance and (Ref: par..a7.a8) a. include in the auditor's report an other-matter paragraph describing If the auditor concludes that a material misstatement exists in other information obtained prior to the date of the auditor s report, and the other information is not corrected after communicating with those charged with governance, the auditor shall should take appropriate action, including the following: (Ref: Parapar. A44A50) (a.) Considering the implications for the auditor s report and communicating communicate with those Page 14 of 66

15 auditor s report and communicating with the material inconsistency, in charged with governance about how the auditor those charged with governance about accordance with section 706, plans to address the material misstatement in the how the auditor plans to address the Emphasis-of-Matter Paragraphs and auditor s report (see paragraph 2223(e)(ii)); or (Ref: material misstatement in the auditor s Other-Matter Paragraphs in the Parapar. A45A51) report (see paragraph 22(e)(ii)); or (Ref: Independent Auditor's Report; 4 Para. A45) b. Withhold the auditor's report (Ref: par. A51) or (b) Withdrawing from the engagement, where withdrawal is possible under applicable law or regulation. (Ref: Para. A46 A47) b. withhold the auditor's report; or c. when withdrawal is possible under applicable law or regulation, withdraw from the engagement. (b) c. Withdrawing from the engagement, where withdrawal isif possible under applicable law or regulation. (Ref: Parapar. A46A52 A47A53) Included the option for the auditor to withhold the auditor s report from extant AU-C section Paragraph.08 of section 706, Emphasisof-Matter Paragraphs and Other-Matter Paragraphs in the Independent Auditor's Report. Material Inconsistencies Identified Subsequent to the Report Release Date.13 When revision of the audited financial statements is necessary as a result of a material inconsistency with other information and the auditor's report on the financial statements has already been released, the auditor should apply the relevant requirements in section 560, Subsequent Events and Subsequently Discovered Facts. 5 5 Paragraphs of section 560, Page 15 of 66

16 Subsequent Events and Subsequently Discovered Facts..14 When revision of the other If the auditor concludes that a material information is necessary after the report misstatement exists in other information obtained after release date and management agrees to the date of the auditor s report, the auditor shallshould make the revision, the auditor should do the following: carry out the procedures necessary under the circumstances. (Ref: par. A9) 19. If the auditor concludes that a material misstatement exists in other information obtained after the date of the auditor s report, the auditor shall: (a) If the other information is corrected, perform the procedures necessary in the circumstances; or (Ref: Para. A48) (b) If the other information is not corrected after communicating with those charged with governance, take appropriate action considering the auditor s legal rights and obligations, to seek to have the uncorrected material misstatement appropriately brought to the attention of users for whom the auditor s report is prepared. (Ref: Para. A49 A50) Responding When a Material Misstatement in the Financial Statements Exists or the Auditor s Understanding of the Entity and Its Environment Needs to Be Updated 20. If, as a result of performing the procedures in paragraphs 14 16, the auditor concludes that a material misstatement in.15 When revision of the other information is necessary after the report release date but management refuses to make the revision, the auditor should notify those charged with governance of the auditor's concerns regarding the other information and take any further appropriate action. (Ref: par..a10) (a.) If the other information is corrected, perform the procedures necessary in the circumstances; or (Ref: Parapar. A48A54) (b.) If the other information is not corrected after communicating with those charged with governance, take appropriate action considering the auditor s legal rights and obligations, to seek to have the uncorrected material misstatement appropriately brought to the attention of anyone in receipt of the financial statements and users for whom the auditor s report is prepared. (Ref: Parapar. A49A55 A50A56) Responding When a Material Misstatement in the Financial Statements Exists or the Auditor s Understanding of the Entity and Its Environment Needs to Be Updated If, as a result of performing the procedures in paragraphs , the auditor concludes that a material misstatement in the financial statements exists Page 16 of 66

17 or the auditor s understanding of the entity and its environment needs to be updated, the auditor shall should respond appropriately in accordance with the other ISAsSASs. (Ref: Parapar. A51A57) the financial statements exists or the auditor s understanding of the entity and its environment needs to be updated, the auditor shall respond appropriately in accordance with the other ISAs. (Ref: Para. A51) Material Misstatements of Fact.16 If, on reading the other information for the purpose of identifying material inconsistencies, the auditor becomes aware of an apparent material misstatement of fact, the auditor should discuss the matter with management. (Ref: par..a11).17 When, following such discussions, the auditor still considers that there is an apparent material misstatement of fact, the auditor should request management to consult with a qualified third party, such as the entity's legal counsel, and the auditor should consider the advice received by the entity in determining whether such matter is a material misstatement of fact..18 When the auditor concludes that there is a material misstatement of fact in the other information that management refuses to correct, the auditor should notify those charged with governance of Page 17 of 66

18 the auditor's concerns regarding the other information and take any further appropriate action. (Ref: par..a12) Reporting 21. The auditor s report shall include a separate section with a heading Other Information, or other appropriate heading, when, at the date of the auditor s report: (a) For an audit of financial statements of a listed entity, the auditor has obtained, or expects to obtain, the other information; or (b) For an audit of financial statements of an entity other than a listed entity, the auditor has obtained some or all of the other information. (Ref: Para. A52) 22. When the auditor s report is required to include an Other Information section in accordance with paragraph 21, this section shall include: (Ref: Para. A53) (a) A statement that management is responsible for the other information; (b) An identification of: (i) Other information, if any, obtained Reporting The auditor s report shall should include a separate section with a the heading Other Information,, or other appropriate heading, when, at the date of the auditor s report: the auditor has obtained some or all of the other information. (a) For an audit of financial statements of a listed entity, the auditor has obtained, or expects to obtain, the other information; or (b) For an audit of financial statements of an entity other than a listed entity, the auditor has obtained some or all of the other information. (Ref: Para. A52) When the auditor s report is required to include an Other other Information information section in accordance with paragraph 2122, this section shallshould include the following: (Ref: Parapar. A53A58) (a.) A statement that management is responsible for the other information; (b) An identification of : (i) Oother information, if any, obtained by the auditor No need to differentiate between reporting requirements for listed and non-listed entities. Page 18 of 66

19 by the auditor prior to the date of the auditor s report; and (ii) For an audit of financial statements of a listed entity, other information, if any, expected to be obtained after the date of the auditor s report; (c) A statement that the auditor s opinion does not cover the other information and, accordingly, that the auditor does not express (or will not express) an audit opinion or any form of assurance conclusion thereon; (d) A description of the auditor s responsibilities relating to reading, considering and reporting on other information as required by this ISA; and prior to the date of the auditor s report (Ref: par. A59); and (ii) For an audit of financial statements of a listed entity, other information, if any, expected to be obtained after the date of the auditor s report; (c.) If applicable, Aa statement that the auditor s opinion does not cover the other information and, accordingly, that the auditor does not express (or will not express) an audit opinion or any form of assurance conclusion thereonon the other information; (d.) A description of the auditor s responsibilities relating to reading, considering and reporting on other information as required by this ISAproposed SAS; and (e.) When other information has been obtained prior to the date of the auditor s report, eeither: ASB directed that subparagraph (d) not refer to a conclusion (January 2017). (e) When other information has been obtained prior to the date of the auditor s report, either: (i) A statement that the auditor has nothing to report; or (ii) If the auditor has concluded that (i.) A a statement that the auditor has nothing to report; or (ii.) Iif the auditor has concluded that there is an uncorrected material misstatement of the other information, a statement that describes the uncorrected material misstatement of the other information. Page 19 of 66

20 there is an uncorrected material misstatement of the other information, a statement that describes the uncorrected material misstatement of the other information. 23. When the auditor expresses a qualified or adverse opinion in accordance with ISA 705 (Revised), 3 the auditor shall consider the implications of the matter giving rise to the modification of opinion for the statement required in paragraph 22(e). (Ref: Para. A54 A58) When the auditor expresses a qualified or adverse opinion in accordance with ISA AU-C section 705, Modifications to the Opinion in the Independent Auditor s Report (Revised), 3 the auditor shall should consider the implications of the matter giving rise to the modification of opinion for the statement required in paragraph 2223(e). (Ref: Parapar. A54A60 A58A64) 3 ISA 705 (Revised), Modifications to the Opinion in the Independent Auditor s Report Reporting Prescribed by Law or Regulation 24. If the auditor is required by law or regulation of a specific jurisdiction to refer to the other information in the auditor s report using a specific layout or wording, the auditor s report shall refer to International Standards on Auditing only if the auditor s report includes, at a minimum: (Ref: Para. A59) (a) Identification of the other 3 ISA 705 (Revised), Modifications to the Opinion in the Independent Auditor s Report Reporting Prescribed by Law or Regulation 24. If the auditor is required by law or regulation of a specific jurisdiction to refer to the other information in the auditor s report using a specific layout or wording, the auditor s report shall refer to International Standards on Auditing only if the auditor s report includes, at a minimum: (Ref: Para. A59) (a) Identification of the other information obtained by the auditor prior to the date of the auditor s report; Not necessary for American auditors. Page 20 of 66

21 information obtained by the auditor prior to the date of the auditor s (b) A description of the auditor s responsibilities report; with respect to the other information; and (b) A description of the auditor s responsibilities with respect to the other information; and (c) An explicit statement addressing the outcome of the auditor s work for this purpose. Documentation 25. In addressing the requirements of ISA as it applies to this ISA, the auditor shall include in the audit documentation: (a) Documentation of the procedures performed under this ISA; and (b) The final version of the other information on which the auditor has performed the work required under this ISA. 4 ISA 230, Audit Documentation, paragraphs 8-11 (c) An explicit statement addressing the outcome of the auditor s work for this purpose. Documentation 25. In addressing the requirements of paragraphs of ISA AU-C section 230, Audit Documentation 4 as it those requirements applies apply to this ISAproposed SAS, the auditor shall should include the following in the audit documentation: a. Documentation of tthe procedures performed under this ISAproposed SAS; and b. (b) The final version of the other information on which the auditor has performed the work required under this ISAproposed SAS. 4 ISA 230, Audit Documentation, paragraphs 8-11 *** *** Application and Other Explanatory Application and Other Explanatory Application and Other Explanatory Material Material Material Page 21 of 66

22 Scope of This Section (Ref: par ) Scope of This Proposed SAS (Ref: par. 1-2 and 9).A1 This section also addresses other A1. There may be circumstances in which, at the date of information for which a designated the auditor s report, the entity is considering the accounting standard setter 6 has issued development of a document that may constitute or may standards or guidance regarding the be part of the entity s annual report (for example, a format to be used and content to be voluntary report to stakeholders) but management is included when such information is unable to confirm to the auditor the purpose of such a voluntarily presented in a document document. If the auditor is unable to ascertain the containing the audited financial purpose of such a document or whether it will be issued, statements and the auditor's report the document is not considered other information for thereon. The auditor's responsibility for purposes of this proposed SAS. other information presented in a document containing audited financial statements A2. In instances in which the auditor applies this that is required to be included by a proposed SAS to other documents to which the auditor, designated accounting standards setter is at management s request, devotes attention, all of the addressed in section 730, Required requirements of this proposed SAS, including those Supplementary Information. standards regarding reporting, are applicable, adapted as necessary in the circumstances. 6 Designated accounting standards setter is defined in paragraph.04 of section 730. A3. Other AU-C sections provide requirements and guidance with respect to information in certain documents other than annual reports. For example, AU-C section 945, Auditor Involvement with Exempt Offering Documents. A4. This SAS also addresses other information for which a designated accounting standard setter 1 has issued standards or guidance regarding the format to be used and content to be included when such information ASB directed that the application paragraph be specific that other AU-C sections include procedures with respect to information included in documents other than annual reports and specifically reference AU-C sections 945 and 703 (May Page 22 of 66

23 is voluntarily presented in an annual report for example, Statement No. 44 of the Governmental Accounting Standards Board, Economic Condition Reporting: The Statistical Section. 2017)..A2 The auditor is not required to make reference to the other information in the auditor's report on the financial statements. However, the auditor may include an other-matter paragraph disclaiming an opinion on the other information. For example, an auditor may choose to include a disclaimer on the other information when the auditor believes that the auditor could be associated with the information and the user may infer a level of assurance that is not intended. Exhibit A, "Example of an Other-Matter Paragraph to Disclaim an Opinion on Other Information," has an example of how an auditor may word such a disclaimer of opinion on other information..a3 Other information may comprise the following: A report by management or those 1 Designated accounting standards setter is defined in paragraph.04 of section 730, Required Supplementary Information. Examples of amounts or other items that may be included in other information are included in Page 23 of 66

24 charged with governance on operations paragraph.a12 of the proposed revised SAS. Financial summaries or highlights Employment data Planned capital expenditures Financial ratios Names of officers and directors Selected quarterly data.a4 For purposes of GAAS, other information does not encompass, for example, the following: Retained moved to paragraph A11. A press release or similar memorandum or cover letter accompanying the document containing audited financial statements and the auditor's report thereon. Information contained in analyst briefings. Information contained on the entity's Page 24 of 66

25 website. Websites are a means of distributing information and are not, themselves, documents containing audited financial statements. Definitions Definitions Annual Report (Ref: Para. 12(a)) Annual Report (Ref: Parpar. 12) A1. Law, regulation or custom may define A1A5. Law, regulation or custom may define the the content of an annual report, and the content of an annual report, and the name by which it is name by which it is to to be referred, for entities in a particular jurisdiction; be referred, for entities in a particular however, the content and the name may vary within a jurisdiction; however, the content and the jurisdiction and from one jurisdiction to another. name may vary within a jurisdiction and from one jurisdiction to another. A2. An annual report is typically prepared on an annual basis. However, when the financial statements being audited are prepared for a period less than or more than a year, an annual report may also be prepared that covers the same period as the financial statements. A3. In some cases, an entity s annual report may be a single document and referred to by the title annual report or by some other title. In other cases, law, regulation or custom may require the entity to report to owners (or similar stakeholders) information on the entity s operations and the entity s financial results and financial position as set out in the financial statements (i.e., an A2A6. An annual report is typically prepared on an annual basis. However, when the financial statements being audited are prepared for a period less than or more than a year, an annual report may also be prepared that covers the same period as the financial statements. A3A7. In some cases, an entity s annual report may be a single document and referred to by the title annual Annual reportreport or by some other title. In other cases, law, regulation, or custom may require the entity to report to owners (or similar stakeholders) information on the entity s operations and the entity s financial results and financial position as set out in the financial statements (i.e.that is, an annual report) by way of a single document, or by way of two or more separate Paragraph A2 from ISA 720 (Revised) was deleted as it was deemed to be unnecessarily confusing. Page 25 of 66

26 annual report) by way of a single document, or by way of two or more separate documents that in combination serve the same purpose. For example, depending on law, regulation or custom in a particular jurisdiction, one or more of the following documents may form part of the annual report: documents that in combination serve the same purpose. For example, depending on law, regulation or custom in a particular jurisdiction, one or more of the following documents may form part of the annual report: Management report, management commentary, or operating and financial review or similar reports by those charged with governance (for example, a directors report). Management report, management commentary, or operating and financial review or similar reports by those charged with governance (for example, a directors report). Chairman s statement. Corporate governance statement. Internal control and risk assessment reports. Examples of documents that may form part of the annual report moved to paragraph A12 (at the ASB s direction January 2017). Chairman s statement. Corporate governance statement. Internal control and risk assessment reports. A4. An annual report may be made A4A8. An annual report may be made available to users available to users in printed form, or in printed form, or electronically, including on the electronically, including on the entity s entity s website. A document (or combination of website. A document (or combination of documents) may meet the definition of an annual report, documents) may meet the definition of an irrespective of the manner in which it is made available annual report, irrespective of the manner in to users. which it is made available to users. A5. An annual report is different in nature, A5A9. An annual report is different in nature, purpose Page 26 of 66

27 purpose and content from other reports, such as a report prepared to meet the information needs of a specific stakeholder group or a report prepared to comply with a specific regulatory reporting objective (even when such a report is required to be publicly available). Examples of reports that, when issued as standalone documents, are not typically part of the combination of documents that comprise an annual report (subject to law, regulation or custom), and that, therefore, are not other information within the scope of this ISA, include: Separate industry or regulatory reports (for example, capital adequacy reports), such as may be prepared in the banking, insurance, and pension industries. Corporate social responsibility reports. and content from other reports, such as a report prepared to meet the information needs of a specific stakeholder group or a report prepared to comply with a specific regulatory reporting objective (even when such a report is required to be publicly available). Examples of reports that, when issued as standalone documents, are not typically part of the combination of documents that comprise an annual report (subject to law, regulation or custom), and that, therefore, are not other information within the scope of this ISAproposed SAS, include: Sustainability reports. Diversity and equal opportunity reports. Product responsibility reports. IRS Form 990, Return of Organization Exempt From Income Tax IRS Form 5500, Annual Return/Report of Employee Benefit Plan Annual statement filed with National Association of Insurance Commissioners Separate industry or regulatory reports (for example, capital adequacy reports), such as may be prepared in the banking, insurance, and pension industries. Corporate social responsibility reports Sustainability reports. Diversity and equal opportunity reports. Product responsibility reports. Labor practices and working conditions reports. Human rights reports. Revisions made to examples pursuant to ASB directive (October 2016) to make the examples U.S. specific. ASB directed that a specific request for comment be included in the exposure draft that requests respondents to provide additional examples of documents that are not within the scope of the proposed standard. Page 27 of 66